Alcon Inc (ALC) Q1 2025 Earnings Call Highlights: Resilient Growth Amid Market Challenges

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Thu, May 15, 2025, 1:07 AM 4 min read

Revenue: $2.5 billion, up 3% year-over-year.
Core Operating Margin: 20.8%.
Core Diluted Earnings: $0.73 per share.
Surgical Franchise Revenue: $1.3 billion, up 2% year-over-year.
Implantable Sales: $420 million, flat compared to the prior period.
Consumables Sales: $712 million, up 6% year-over-year.
Equipment Sales: $199 million, down 6% year-over-year.
Vision Care Sales: $1.1 billion, up 3% year-over-year.
Contact Lens Sales: $688 million, up 4% year-over-year.
Ocular Health Sales: $432 million, up 2% year-over-year.
Core Gross Margin: 63.2%.
Free Cash Flow: $278 million, up from $229 million in the prior year.
Full Year Revenue Guidance: $10.4 billion to $10.5 billion.
Full Year Core Operating Margin Guidance: 20% to 21%.
Full Year Core Diluted Earnings Guidance: $3.05 to $3.15 per share.

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Release Date: May 14, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Alcon Inc (NYSE:ALC) reported sales of $2.5 billion for the first quarter, reflecting a 3% growth, showcasing the company's resilience despite a soft US surgical market.
The launch of Unity VCS and PanOptix Pro is expected to drive significant growth in the latter half of the year, with high single-digit revenue growth anticipated.
Alcon Inc (NYSE:ALC) acquired a majority interest in Aurion Biotech, which could revolutionize corneal transplantation and potentially generate peak sales of $0.5 billion or more.
The company's Vision Care segment saw strong growth, particularly in innovative lenses like Precision 1 and Total 30 families, which grew double digits.
Alcon Inc (NYSE:ALC) is actively mitigating tariff impacts through strategic measures such as supplier diversification and optimizing its manufacturing network, aiming to offset the $80 million tariff pressure.

Negative Points

The US surgical market remains soft, impacting Alcon Inc (NYSE:ALC)'s implantable sales, which were flat year-over-year at $420 million.
Alcon Inc (NYSE:ALC) faces competitive pressures in the US market, particularly in the advanced technology IOLs segment.
The company's equipment sales declined by 6% year-over-year, although growth is expected to accelerate in the second half of the year.
Tariff impacts are expected to pressure cost of sales by approximately $80 million for the full year, with most of the impact in the second half.
Alcon Inc (NYSE:ALC) has updated its full-year revenue guidance to reflect a softer US surgical market, now expecting sales growth of 6% to 7% in constant currency.

Q & A Highlights

Q: Can you elaborate on the expected growth acceleration for the remainder of the year and the factors driving it? A: (Timothy Stonesifer, CFO) The growth acceleration is expected in the back half of the year, driven by the timing of product launches such as Unity VCS, PanOptix Pro, Precision 7, and SYSTANE PRO. We anticipate high single-digit revenue growth in the latter half of the year, contributing to a 6% to 7% revenue growth for the full year.

Q: What are your thoughts on the subdued US cataract market, and is it a market or competition issue? A: (David Endicott, CEO) The US cataract market's softness is primarily a market issue, not a competition issue. It's related to surgeon productivity, with many experienced surgeons retiring or reducing their workload. We expect the market to normalize over time, and our new products like Unity VCS can help improve surgical efficiency.

Q: Can you provide more details on the impact of tariffs and how you plan to mitigate them? A: (Timothy Stonesifer, CFO) The gross impact of tariffs is estimated to pressure cost of sales by approximately $80 million for the full year. We plan to offset this through operational actions and currency tailwinds. The impact will be more significant in the second half of the year as tariffs are capitalized in inventory and flow into the income statement.

Q: How is the launch of PanOptix Pro expected to perform, especially in light of competitors' recalls and relaunches? A: (David Endicott, CEO) We are excited about PanOptix Pro, which reduces light scatter by 50%, addressing issues like halos and glare. The product has been well-received, and we expect significant uptake. While competitors are back in the market, we remain confident in our product's competitive edge.

Q: What is the outlook for the contact lens market, and how are legacy products impacting growth? A: (David Endicott, CEO) The contact lens market remains healthy, with mid-single-digit growth expected globally. While legacy products are declining, our new products like Precision 7 are gaining traction. We are under-indexed in the reusable lens category, which presents an opportunity for growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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